Filipe R Costa

Are valuations now dangerously stretched?

Are valuations now dangerously stretched?

6 mins. to read

Stretched Valuations Since the beginning of the year, I have been drawing the attention of the reader to the lack of volatility in U.S. markets, as such a high level of complacency is extreme by historical standards and is not supported by current fundamentals. Recently, the VIX (INDEXCBOE:VIX) fell below 10, which is a rare…

Apple’s recovery lacks solid foundations

Apple’s recovery lacks solid foundations

7 mins. to read

Not good enough Apple has just released its earnings for the quarter ending 1 April, reporting revenues of $52.9 billion, earnings per share of $2.10, a profit margin of 38.9% and an enviable accumulated cash balance of more than a quarter trillion dollars! The company increased its quarterly dividend payments by 10.5% to 63c per…

Sweeten your portfolio with cocoa

Sweeten your portfolio with cocoa

1 mins. to read

In this instalment of The Macro Investor, I’m going to lay the foundations for a long position in cocoa. A solitary undertaking, sound investment comes from developing an alternative, contrarian, view and opposing the crowd when sentiment is extreme. When everybody is pessimistic about the prospects for a market, we hit ground zero. From that…

Signs of life in the eurozone

Signs of life in the eurozone

7 mins. to read

Last Thursday, the ECB decided to keep its monetary policy unchanged, as widely expected, and delay a significant change in its stance until the next meeting, as the political situation in France is still sensitive. While experiencing some volatility during the meeting, the euro is currently trading at almost the same level as it was…

Is there any upside in oil?

Is there any upside in oil?

5 mins. to read

Far from memory is the time when Saudi Arabia and OPEC were in control of global oil prices, as are oil prices above $100. A nascent fracking industry in the US, deteriorating social conditions in some oil producing countries and a desire in Saudi Arabia to retain market acted like an explosive mix that changed…

How to make sense of bond madness

How to make sense of bond madness

6 mins. to read

After some initial enthusiasm, investors are now having second thoughts about the reflation trade and once again pouring more money into bonds, as inflation is expected to remain low for longer than first appeared. But, when yields on a 70-year sovereign are at 1.65%, something must be seriously wrong and it can all only end in tears. Financial markets…

Tesla’s promises are too expensive

Tesla’s promises are too expensive

5 mins. to read

Although many investors wouldn’t agree with me, I believe that one of the main aberrations in the U.S. stock market is the fact that Tesla Inc (NASDAQ:TSLA) is worth the same as General Motors Company (NYSE:GM), despite the huge differences between them in terms of revenues, profits, margins, market share, operational aspects and financial strength.…

The risks are piling up in emerging markets

The risks are piling up in emerging markets

6 mins. to read

Financial markets have been on an impressive run since Donald Trump was elected in November. The S&P 500 is up 10.7%, the Dow is up 13.1% and the MSCI World (which is a proxy for developed markets) is up 9.9%. Trump’s promises in terms of tax cuts, infrastructure spending, protectionism for US industries, repeal of…

Iceland re-opens its door to capital flows

Iceland re-opens its door to capital flows

5 mins. to read

While Europe is recovering from the financial and sovereign crises at a very moderate pace, Iceland seems to have completely reversed one of the worst banking crises ever seen, where three banks with assets in excess of 10x the country’s GDP suddenly collapsed. Almost 10 years after the peak of the crisis, when the central…

Rates up, populism down

Rates up, populism down

7 mins. to read

Last week we witnessed some interesting global developments that will pave the way forward: populism was somewhat defeated in the Netherlands, the FED hiked its key rate by another 25 basis points, an ECB official hinted at policy normalisation, and the BoE appeared more hawkish than many expected. After more than a decade of sluggish…